Robert Gothan, CEO of Accountagility, discusses why the CFO and CIO partnership can be a difficult one – and why it is such an important one
The traditional boardroom has changed dramatically over the past decade.
With the creation of more C-level titles than ever before, responsibilities are shifting in line with the digital economy and new business requirements.
There is one role, however, that has always been responsible for several different business functions: the CFO.
With a job description that previously covered everything from IT to HR, the CFO was seen as a leader in many parts of the business, as well as the person in charge of different departments.
Whilst the CFO’s focus has now returned to its original purpose – finance – there is also mounting pressure for the CFO to be a strategic, executive presence in the boardroom.
Today’s CFOs are not only expected to make recommendations to influence the business’s growth and profitability, but also to ensure its actual existence in some cases.
The insights that are needed to achieve these goals rely upon data that has been extensively analysed. Unsurprisingly, this responsibility used to sit firmly with the CIO, but the situation is now much less clear, as these roles overlap.
As a result, these two board heavyweights can either endlessly lock horns over the ownership of data and executive decisions, or work together to establish a true partnership and create maximum value for the wider business.
In most organisations, the responsibilities assigned to the CFO and CIO are meant to ensure that current business operations are running efficiently and effectively and help shape the strategy for future business growth and stability.
But in order to forge a better mutual understanding, these individuals need to first consider what their positions have in common.
The good news is that EY’s recent report The CFO Agenda shows a desire for these two roles to collaborate more often. The report showed that 61% of CFOs have increased collaboration over the last three years, involving themselves far more in the IT agenda and adding value by managing costs and profitability across the business.
There are still kinks to be ironed out, however, and the report highlighted that some CFOs still have an insufficient understanding of IT issues.
Even so, the convergence of technology, investment strategy and risk in today’s digital economy has elevated collaboration between these two roles to new heights.
Because of this, any disconnect will undoubtedly cause a ripple effect throughout the organisation and consequently jeopardise technological advancements.
With the CFO’s main contribution to IT being based on cost rather than strategy, a more productive working relationship is required for organisations to maintain their competitive edge.
A lack of understanding
A major roadblock that is often cited as preventing effective communication between the CFO and CIO is the difference in language: one speaks the language of finance, the other of technology. Coupled with opposing personalities, the challenge of understanding one another can prove nigh impossible at times.
For example, CFOs often fault CIOs for their inability to align IT projects and budgets with adding value to the business and its strategy, and find it difficult to understand the priorities, costs and ROI of IT projects.
At the same time, CIOs find the CFO lacking an understanding of the realities associated with managing and implementing technology within a business.
To counter this difficulty, it is vital for CFOs to understand what their CIO is trying to communicate. Typically, CIOs are big-picture thinkers with new ideas and possibilities in mind for the business, whereas CFOs usually value detail, logic and results-based thinking.
Whilst these archetypes are by no means true of all CFOs and CIOs, being aware of the differences and potential barriers to communication is a crucial part of fostering a partnership between the two roles.
To achieve this goal, CFOs should consider employing a ‘Business Partnering’ approach, where the CFO provides more technical, commercial insights for the business to input into wider strategies.
By using strategic thinking with data as its core, the CFO and CIO can work together to help plan, budget and forecast for what lies ahead.
It is vital for CFOs and finance directors to continue minimising the cost of business functions, whilst at the same time focusing on developing a company’s transformation and growth.
Ultimately, the relationship between the CIO and CFO can directly affect a company’s success, so the two must come together to provide high-level strategic ideas to propel the business forward.
The relationship between the CFO and CIO has historically had a strong cost dynamic, with the amount being spent by the IT department often a point of contention.
Many CIOs have previously found themselves reporting to the CFO as a result of the need to keep an eye on hidden costs and managing IT projects.
In today’s business world, however, technology is crucial to both operational excellence and business growth. As such, CFOs are becoming far more aware of the strategic value that IT adds to an organisation, and are now seeing it as an essential tool for achieving broader efficiency goals.
To make the CFO/CIO partnership a success, it is vital that these individuals work as peers and take joint responsibility for driving innovation through IT.
With bold technology investment decisions in the mix, these two roles must work together to increase the CFO’s involvement in the IT agenda and push data-driven decisions into the heart of a business’ future strategy.
Robert Gothan is the CEO and founder of Accountagility.